China local government debt rises to $3.4tn
December 30, 2013, 10:28 am

A Chinese Cabinet report released on Wednesday last week criticized what it called “blind government investment in industrial projects” saying this increased risks in local government debt [Xinhua]

China’s National Audit Office (NAO) said Monday in a statement that governments at various levels in China were liable for a total direct debt of 20.7 trillion yuan ($3.4 trillion) by the end of June, 2013.

Total debt guaranteed by governments at various levels amounted to 2.93 trillion yuan ($479.7 billion) at the end of June, NAO said in the statement posted on its website.

“China’s government debt risks are under control in general, but there are potential risks at some places,” the NAO said.

A Chinese Cabinet report released on Wednesday last week criticized what it called “blind government investment in industrial projects” saying this increased risks in local government debt.

China’s Finance Minister Lou Jiwei said on Thursday last week that China will enhance the management of its local government debt.

“In the next year, we will strengthen local government debt management. We will build open channels, block secret routes and contain debt risks effectively,” Lou said at an annual national fiscal work conference.

57 founding members, many of them prominent US allies, will sign into creation the China-led Asian Infrastructure Investment Bank on Monday, the first major global financial instrument independent from the Bretton Woods system.

Representatives of the countries will meet in Beijing on Monday to sign an agreement of the bank, the Chinese Foreign Ministry said on Thursday. All the five BRICS countries are also joining the new infrastructure investment bank.

The agreement on the $100 billion AIIB will then have to be ratified by the parliaments of the founding members, Chinese Foreign Ministry spokesman Lu Kang said at a daily press briefing in Beijing.

The AIIB is also the first major multilateral development bank in a generation that provides an avenue for China to strengthen its presence in the world’s fastest-growing region.